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Senate payroll tax credit could trigger battle with House

House Majority Leader Steny Hoyer (D-Md.) is praising the
Senate for including a payroll tax credit in its jobs package, but it could set
up a battle in his House Democratic caucus.

Economic conditions are ripe for a provision that serves as
an incentive for employers to expand their workforces, in Hoyer’s eyes. The
economy is growing again, and surveys indicate growing confidence by business.

“The economists that talked to us [said] a jobs tax credit
would in fact be very effective,” Hoyer said at his weekly press conference
this week. “There seems to be a sense that this is an environment where this
will be really helpful.”

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At the same time, Hoyer acknowledged resistance within his
party from those who worry the tax break might only be used by companies
already planning to hire additional workers.

The non-partisan Tax Policy Center agreed with this
assessment and reduced the credit to a political ploy by Democrats to maintain
their majority after November’s election.

“[A] cynic might say it is an effort to bail out terrified
Democrats by paying companies to hire new workers before the November
elections,” writes Howard Gleckman in a Jan. 29 blog, TaxVox. Gleckman is a
senior research associate who splits his time between the Urban Institute and
the Tax Policy Center.

“It might even help Democrats take credit for hiring that
was going to happen anyway,” he writes.

Separately, there’s worry among some Democrats that their
leaders in the Senate are overloading a jobs package with tax breaks for
business.

A draft of the bill also calls for a $1,000 increase for
hiring-related tax credits. To qualify, workers must be hired in 2010 and be employed
for at least 52 consecutive weeks. The credit cannot be used in years prior to
the bill’s enactment. But the draft offers no guidance on applying unused
portions of the credit to future years, indicating outlays for the bill could
extend beyond the current year.

The bill is presently expected to cost $85 billion the first
year and $19 billion the second year. But lobbyists say Senate leaders want to trim
its price tag to win Republican support for the legislation.

Once the Senate unveils its bill the House will follow suit
with a similar proposal, staffers said.Talks between chamber leaders have taken place on the bill to help
ensure a bicameral consensus and quick passage of the package.